pure guess, page-14

Hi Guys,
Recently came back again to this board after buying some stock a few months back as a small punt and discussing the business on this board. I have to say I think MES are still quite undervalued at this price I highly doubt you will see this stock below 20c this time next year. Notwithstanding, this business is remarkably difficult and really there are tons of things I dont like about it. I have become quite comfortable however with the gearing/leverage considering their balance sheet and the way companies generally operate in China maximising revenues by way of VAT to the government, so thats less of a worry for me compared to say an Aus company with such short term rolling loans. But what I do not like at all are the intercompany guarantees and reliance on large single customers. Even if this is director related, its still higher risk in my opinion. What I have noticed is that 2nd half sales are usually significantly higher than 1st half and their projections due to winter season and in the half year report it seems to me seriously UNDER what I would expect based on some corroborating evidence about the general strength of the market and higher pricing coming through. Perhaps they are underpromising in order to overdeliver. Well we should know within the next month or so anyway. (Im betting a nice upgrade and divy is coming) Also all the comments on the board about currency movements and volume traded etc are futile. At the end of the day currency is going to go whichever way and no attention should be paid to this. Secondly the volume traded in this co is so small due to majority held etc its really pointless to even discuss it, its so minimal. This stock will always only appeal to fringe players - first the distrust and history of these China based listings and secondly the absolutely tiny free float.

That being said, MES current price clearly does not reflect its balance sheet strength, earnings growth or potential earnings yield on book assets trading well below reality. If I was the majority holder, I would make an offer at 20c for the other 25%. However I must say, that would be a bit cheeky.